U.S. drivers are now paying more to fill up their gas tanks than they ever have at this time of year.
The national average price of retail gasoline posted its biggest overnight increase in 23 months,rising four cents to $3.462 a gallon on Friday, according to AAA. The average price has risen 13 cents in the past week, a 4 percent jump.
"This is the highest price record for February 1st," says OPIS analyst Tom Kloza, who predicts the average price could reach $3.50 a gallon this weekend.
NYMEX March RBOB gasoline futures, which help determine prices at the pump, have risen 10 percent in the past two weeks to a session high of $3.045 a gallon on Friday.
"Refinery issues and speculation about refinery issues has a lot of money betting on still higher prices," Kloza said.
Oil producer Hess announced earlier this week that it is shutting its refinery in Port Reading, N.J., by the end of February. That refinery accounts for about 7.5 percent of oil production on the East Coast at about 70,000 barrels per day. Philadelphia Energy Solutions is also set to begin planned maintenance at its 335,000 barrel per day Philadelphia refinery.
Traders and analysts forecast the closure and maintenance of refineries near the New York Harbor will further tighten gasoline supplies in the region. Planned maintenance in other parts of the country also add to concerns about gasoline supplies.
Meanwhile gasoline demand is on the rise. While total U.S. gasoline supplies fell by 1 million barrels last week, gasoline demand increased by 70,000 barrels a day to the highest level since the end of December.
Analysts say the U.S. Labor Department's upward revision to payrolls data on Friday is further indication of steady economic growth and will lead to continued increases in gasoline demand. The number of non-farm jobs added in November was revised sharply higher from 161,000 to 247,000, while the figure for December was upgraded from 155,000 to 196,000.
"Significant upward revisions for 2012 and last two months of the year in particular are showing up in the increase in gasoline demand," says John Kilduff, founder of Again Capital. "Improvement in employment is going to be supportive of gas prices."